Scandinavian Working Papers in Business Administration

Discussion Papers,
Norwegian School of Economics, Department of Business and Management Science

No 2025/20: Local Booms and Innovation

Federica Coelli () and Paul Pelzl ()
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Federica Coelli: Dept. of Economics, University of Zurich, Postal: University of Zurich , Department of Economics, Schönberggasse 1, Room SOF-G17, 8001 Zurich, Switzerland
Paul Pelzl: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway

Abstract: Using oil and gas shocks as an exogenous source of business cycles at the U.S. commuting zone level, we provide novel evidence that local booms increase local patenting, especially in non-metropolitan areas. This reflects agglomeration economies that make incumbent inventors more productive. In contrast to total patenting, innovation in oil and gas – the sector closest to the boom – is countercyclical, consistent with higher opportunity costs of innovation in a booming industry. Our findings shed new light on the spatial dimension of innovation, inform recent debates on place-based industrial policy, and help to reconcile mixed evidence on the cyclicality of innovation.

Keywords: Innovation; patents; local economic booms; agglomeration; natural resources

JEL-codes: L71; O12; O31

Language: English

95 pages, May 26, 2025

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